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Exploiting cross border benefits -- New Mexico and Arizona

A new 90 MW wind farm is about to push New Mexico into the top five states in cumulative megawatts -- and help jump-start a sluggish renewables market in Arizona. The Argonne Mesa Wind Ranch, near Santa Rosa in Guadalupe County, is expected online this month or next. The project, sited on some 10,000 acres of private land, will use Mitsubishi 1 MW turbines and bring New Mexico's wind total to 497 MW, ahead of Oklahoma's 475 MW.

Argonne Mesa's output will cross the Arizona border through a 20 year power purchase agreement (PPA) with Arizona Public Service (APS), which had issued a 100 MW request for proposals in 2005. "This was the biggest project we awarded under that solicitation," says APS's Barbara Lockwood. "It will be the first wind project to come online for us and it's our largest renewable energy project to date. It's important for us because we can deliver it right to our load in Phoenix. We're happy to have it."

The deal signals new interest in wind power in Arizona, a state that currently has no significant development, but is expected to expand its renewables portfolio standard from a paltry 1.1% by 2007 to 15% by 2025. "We're definitely ramping up our renewables," Lockwood says. "And wind will be part of anything we look at in the future." APS, Arizona's largest and longest serving electric utility, serves more than a million customers in 11 of the state's 15 counties. The PPA represents the first time a New Mexico wind farm has sold its power outside the state and is seen by some as a prudent move.

"We're actually very happy to see an export market," says Ben Luce of the New Mexico Coalition for Clean Affordable Energy. "The New Mexico utilities didn't need to add anything more right now because they've actually met their targets for the next five years."

Hot bed

New Mexico, with an RPS that rises to 10% in 2011, continues to establish itself as a wind energy development hotbed. The state offers a tax credit of one cent per kilowatt hour of electricity produced, and next year state legislators will be looking at a promising bill that is expected to result in vastly expanded transmission capabilities.

"The bill would create a quasi-government agency to plan and partially finance new transmission lines if it can be shown that they will carry at least 30% renewable energy," says Luce. "At present, we have capacity for probably a couple hundred more megawatts of wind that could be added to the system. But we also know that we're starting to run up against the limits."

Luce says the bill has strong support as New Mexico aims to pass Iowa and Minnesota in the nation's wind power standings. "Our goal is to be third," he says. "That's the actual goal the governor set in his last campaign." Iowa, with 836 MW, and Minnesota, with 794 MW, currently hold down the third and fourth spots behind Texas and California.

"We really haven't had any significant problems in New Mexico," Luce says. "The ultimate lack of transmission and a relatively small load are our biggest limitations, but those are things we can deal with. We envision adding between 4000 and 8000 megawatts. We'd like to see it in the next ten years and we're not shy about saying it."

The Argonne Mesa Wind Ranch was developed by the former Superior Renewable Energy, a Houston company recently snapped up by Babcock & Brown, an asset fund manager traded on the Australian stock exchange with major investments in wind plant in Europe, North America and Australia.

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